RBS to shortlist bidders for £1.6bn loan book

The Royal Bank of Scotland is expected to shortlist bidders for the sale of a £1.6bn loan book made to UK real estate. The Financial Times listed various private equity real estate platforms as potential bidders.

Part-nationalised UK bank, Royal Bank of Scotland (RBS) is to form a shortlist this week for the sale of approximately £1.6 billion (€1.8; $2.6 billion) of UK property loans, according to a report by the Financial Times.

The FT said that private equity real estate firms including The Blackstone Group, Apollo Global Management, Starwood Capital Group and Lone Star Funds were ‘thought to be’ among those mulling bids for the loans – a mix of performing and non-performing debt.

The loan book, which is being marketed for sale through Lazard, is expected to pre-emept further disposals by RBS of loans made to real estate in the US and Germany. RBS earlier this year sold a €300 million loan book behind Spanish real estate to Perella Weinberg, the New York-based firm. Further debt offloads to firms including AXA Real Estate Investment Managers have also happened.

The loan book was originally reported to have been closer to £3 billion in size, but was reduced following a review. The FT said: “RBS is expected to sell about half the portfolio to its new partner, who would also be expected to manage it.”

“About half the book would be debt funded, partly by its partner, while the bank’s share of the equity could also be offered to other institutional investors in a fund structure.” That format would enable the bank to relinquish an element of risk while concurrently keeping it exposed to potential future returns.